NAND Supply Tightness Continues (still)

TRENDFOCUS just recently concluded another trip through the U.S. and Asia. Once thing is for certain – NAND tightness continues…. And will continue through most of 2017. From a pricing perspective, this means continued higher prices for SSDs in the market.

With all major NAND vendors continuing to focus on trying to ramp 3D NAND (most of them on their first generation) challenges persist. Even as this new NAND technology ramps, getting this NAND qualified with new controllers and new SSD platforms will take some time. So the narrative remains the same – there is only so much planar NAND to go around, and 3D NAND is a 2017 product, at best.

SSD prices have increased in the last couple quarters – anywhere between 3%-15%, and it appears that there will be only little relief during the first half of 2017, with flat pricing being the best outcome. Even with these pricing challenges, SSD attach rates for notebook PC are still tracking to approximately TRENDFOCUS’ original forecast of approximately 32%-34%. Even with a declining percentage of NAND going to applications such as thumb drives, raw NAND spot market sales, lower end eMMC solutions, etc., a measurable portion (~20%) is still consumed each quarter. This downward trend will most likely continue in the upcoming quarters in an effort to allocate as much NAND as possible for other businesses, which are more lucrative such as enterprise SSDs for system OEMs, client SSDS for notebook PC OEMs, and enterprise SSDs for datacenter or hyperscale customers.

In summary – it is good news for NAND and SSD suppliers due to continued healthier pricing, but bad news for customers having to absorb higher prices.